The Ministry of Justice said on the 25th that it sent a letter to Lone Star, a U.S. private equity fund, demanding payment of 7.4 billion won in litigation expense after winning in an investor-state dispute settlement (ISDS) over the sale of Korea Exchange Bank.
Earlier, on the 18th, the annulment committee of the International Centre for Settlement of Investment Disputes (ICSID) under the World Bank ruled in favor of the Korean government in the lawsuit between the Korean government and Lone Star over the sale of Korea Exchange Bank.
As a result, the roughly 400 billion won (based on the current exchange rate), including the $216.5 million in damages and interest that our government was originally supposed to pay to Lone Star, will not have to be paid at all. The ICSID annulment committee also ordered Lone Star to pay the expense the government incurred in litigating against Lone Star.
In line with this decision, the Ministry of Justice sent a demand letter urging voluntary repayment of about 7.3 billion won in expense incurred in the ISDS annulment proceedings, about 800 million won in the Korean government's expense cited in the May 8, 2023 decision correcting the principal amount of damages, and the interest thereon, totaling about 7.4 billion won. The repayment deadline is by the 18th of next month, within 30 days from the date the annulment decision was rendered.
Earlier, on the 21st (local time), Lone Star voluntarily withdrew an action it had filed in June 2023 in U.S. federal court to enforce the award. The suit was filed by Lone Star to enforce the original award ordering the Korean government to pay $216.5 million in damages and the interest.
In September 2023, the Korean government strongly argued to the ICSID annulment committee that "the enforcement of the original award must be stayed until the annulment proceedings conclude, without conditions such as partial guarantees of payment." In December of the same year, the annulment committee granted the stay of enforcement without conditions, blocking Lone Star's attempts at forced execution.
A Ministry of Justice official said, "We will do our utmost to swiftly recover the litigation expense and make every effort to safeguard the national interest."